As oil went through a price revolution starting in 2004, the venture capital community embraced an array of greentech start-ups. But the first wave of these, which centered on biofuels and other liquid-based replacements for oil, were destined to fail – and fail they did. It has apparently taken a period of digestion and reflection for investors, innovators, and venture capital to quantify better which areas are more promising in the new energy landscape.

Just recently, for example, investment vehicles controlled by Peter Thiel and Bill Gates were among those who funded energy storage company LightSail, which is exploring the use of compressed air as a method for energy storage. This is meaningful.

It indicates an awareness that not only is global energy demand switching over to the grid, but also, that the grid of the future will need much greater flexibility. So, yes, the grid is the future. But storage – the ability to retain surplus electricity for release at a later time – will be crucial. The reason is that the blend or mix now developing: coal, nuclear, natural gas, hydro, utility-grade wind, and solar (including residential solar) will present a challenge to the grid with its enormous variability in supply.

Storage, to use an economics term, allows for intertemporal supply: the ability to spread power over time. Whether or not LightSail’s technology works and is commercially scalable is a question that awaits an answer. But to target investment in this area, rather than in algae fuels, is right on the mark.

And the need for storage is already becoming critical. The “variability problem” is especially a concern...